5 Steps to Retirement Planning in 2025: An Introduction and How-to Guide
In five short steps, we'll give you ideas on building and managing your retirement money.
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A financially secure retirement starts with making a plan. There are two main steps: start with how much money you’ll need and your priorities, then choose account types and investment selections. That might feel like a lot of work, but here’s what that breakdown looks like.
When can you retire?
When you can retire comes down to two things:
When you’d like to retire.
When you'll have enough money to provide you with a reliable amount of retirement income.
While retirement age is different for everyone, the earliest you can claim Social Security retirement benefits is age 62. However, by filing at 62, you may sacrifice a portion of your benefits. That's because if you were born in 1960 or later, the full retirement age (which is also the full Social Security benefits age) is 67. Your Social Security retirement benefit will actually increase for every year you delay retiring, up until age 70.
See where you stand compared to households like yours, and get steps you could take to grow from here.
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5 steps for retirement planning
The end goal of retirement planning is having enough money to quit working and do whatever you want. Our aim with this guide is to help you create a plan to achieve that goal.
1. Know when to start retirement planning
When should you start retirement planning? That's up to you, but the earlier you start, the more time your money has to grow.
That said, it’s never too late to start retirement planning. Even if you haven’t considered retirement, every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.
2. Figure out how much money you need to retire
How much income you need in retirement depends on your current income and expenses, and how you think your income and expenses might change in retirement. For example, consider what expenses you'd like to keep or need to keep, such as vacations and dinners out, as well as car and home maintenance costs.
The typical advice is to replace 70% to 90% of your annual pre-retirement income through savings and Social Security. With this strategy, a retiree who earns around $63,000 per year before retirement should expect to need $44,000 to $57,000 per year in retirement.
» Go deeper: Use our free retirement calculator
3. Prioritize your financial goals
Retirement is likely not your only savings goal. Many people have other financial goals they feel are more pressing, such as paying down credit card or student loan debt, or building an emergency fund.
It's a good idea to save for retirement while you're building your emergency fund — especially if you have a retirement plan at work that matches any portion of your contributions.
4. Choose the best retirement plan for you
A cornerstone of retirement planning is determining not only how much to save, but also where to save it.
If you have a 401(k) or other employer retirement plan with matching dollars, consider starting there.
If you don’t have a workplace retirement plan, you can open your own retirement account.
There is no single best retirement plan, but there is likely a best retirement plan — or combination of retirement accounts — for you. In general, the best plans provide tax advantages, and, if available, an additional savings incentive, such as matching contributions. That's why, in many cases, a 401(k) with an employer match is the best place to start for many people.
💸 If you don't have access to a workplace plan (or the one you're offered doesn't come with a match), or you’re already contributing to a 401(k) and you’re looking for the best options for additional retirement savings, you may want to consider an IRA.
» Learn more: How to open an IRA
Here are seven types of retirement plans that might work for you:
» Go deeper: Read more about how to choose a retirement account
5. Select your retirement investments
Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of retirement investments depends on how long you have until you need the money and how comfortable you are with risk.
The general approach to retirement investing is to invest relatively aggressively when you’re young, then slowly transition to a more conservative mix as you approach retirement age. This gives your money the best chance of weathering market fluctuations. A few bad years won’t ruin you, and over time, your nest egg can benefit from the stock market’s history of long-term growth.
» Next step: Read our guide to investing for retirement
There are many different approaches to retirement investing. For a hands-off strategy, a handful of low-cost mutual funds might be helpful. Or, if you want professional guidance, consider a financial advisor who can work with you to plan and manage your money for retirement.
» Ready to get started? See our picks for the best financial advisors
Frequently asked questions about retirement planning
"What if I haven't saved enough to retire?"
If you're nearing retirement and aren't sure if you've saved enough, there are still things you can do. Start by estimating your expected expenses, any other income sources and how long you expect to work to see how much you'll actually need for retirement.
You can still make the most of your retirement savings, which could include maximizing catch-up contributions to retirement accounts and checking if you're eligible for tax credits, including the saver's credit.
"How can I make my money last through retirement?"
While the first step of retirement planning is to estimate how much you'll need, there are additional strategies to help stretch your money in retirement. Some experts suggest the 4% rule, which suggests withdrawing no more than 4% of your savings annually in retirement to avoid spending too quickly. Other strategies could include diversifying income streams, budgeting carefully, and managing your retirement and investment portfolios.
» Calculate: How long will my money last in retirement?
"How should I plan for retirement as a family?"
A coordinated approach with all family members ensures that everyone is on the same page when it comes to planning for the future. Discussing expectations of retirement, such as where to live, lifestyle and potential caregiving responsibilities, can help inform how much you'll need to save for retirement. From there, you can assess income streams, plan retirement account contributions and create an investment strategy to help you reach your goals.
